Principles of Management

Charles W.L. Hill

U N I V E R S I T Y O F WA S H I N GTO N

Steven L. McShane

U N I V E R S I T Y O F W E S T E R N A U S T R A L I A

PRINCIPLES OF MANAGEMENT

Boston Burr Ridge, IL Dubuque, IA Madison, WI New York San Francisco St. Louis

Bangkok Bogotá Caracas Kuala Lumpur Lisbon London Madrid Mexico City

Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto

hiL30123_fm_i-xvii.indd i 11/10/06 9:52:23 PM 11/10/06 9:52:23 PM

PRINCIPLES OF MANAGEMENT

Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of

the Americas, New York, NY, 10020. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights

reserved. No part of this publication may be reproduced or distributed in any form or by any means,

or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill

Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission,

or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside

the United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 0 DOW/DOW 0 9 8 7 6

ISBN 978-0-07-353012-3 (student edition)

MHID 0-07-353012-3 (student edition)

ISBN 978-0-07-331626-0 (instructor’s edition)

MHID 0-07-331626-1 (instructor’s edition)

Editorial director: John E. Biernat

Senior sponsoring editor: Ryan Blankenship

Developmental editors: Natalie Ruffatto and Laura Griffin

Senior marketing manager: Anke Braun

Media producer: Greg Bates

Lead project manager: Mary Conzachi

Lead production supervisor: Michael R. McCormick

Senior designer: Kami Carter

Senior photo research coordinator: Jeremy Cheshareck

Photo researcher: Keri Johnson

Supplement producer: Ira C. Roberts

Senior media project manager : Susan Lombardi

Cover and interior design: Kami Carter

Cover image: © Corbis Images

Typeface: 10/12 Times New Roman

Compositor: Techbooks

Printer: R. R. Donnelley

Library of Congress Cataloging-in-Publication Data

Hill, Charles W. L.

Principles of management / Charles W.L. Hill, Steven L. McShane.

p. cm.

Includes index.

ISBN-13: 978-0-07-353012-3 (student edition : alk. paper)

ISBN-10: 0-07-353012-3 (student edition : alk. paper)

ISBN-13: 978-0-07-331626-0 (instructor’s edition : alk. paper)

ISBN-10: 0-07-331626-1 (instructor’s edition : alk. paper)

1. Management. I. McShane, Steven Lattimore. II. Title.

HD31.H4885 2008

658--dc22

2006033368

www.mhhe.com

hiL30123_fm_i-xvii.indd ii 11/10/06 9:52:23 PM 11/10/06 9:52:23 PM

Fo r L a n e

— C . W. L . H .

D e d i ca te d w i t h L ove

and devotion to Donna,

a n d to o u r w o n d e r f u l

daughters, Bryton and

M a d i s o n

— S . L . M .

hiL30123_fm_i-xvii.indd iii 11/10/06 9:52:23 PM 11/10/06 9:52:23 PM

about the // AUTHORS

Charles W. L. Hill

Charles W. L. Hill is the

Hughes M. Blake Professor

of International Business at

the School of Business,

University of Washington.

Professor Hill recei ved his

PhD from the University of

Manchester’s Institute

of Science and Technology

(UMIST) in Britain. In addition

to the Uni versity of Washington,

he has ser ved on the f aculties of UMIST , Texas A&M

University, and Michigan State University.

Professor Hill has pub lished over 40 ar ticles in peer -

reviewed academic jour nals, including the Academy of

Management Journal, Academy of Mana gement Review,

Strategic Management Journal, and Organization Science .

He has also pub lished two college texts: one on strate gic

management and the other on inter national business. Pro￾fessor Hill has served on the editorial boards of several aca￾demic journals, including the Strategic Management Jour￾nal and Organization Science. Between 1993 and 1996 he

was consulting editor at the Academy of Mana gement

Review .

Professor Hill teaches in the MB A, Executive MBA,

Management, and PhD pro grams at the Uni versity of

Washington. He has recei ved awards for teaching e xcel￾lence in the MBA, Executive MBA, and Management pro￾grams. He has also taught customized executive programs.

Professor Hill works on a consulting basis with a num￾ber of organizations. His clients have included ATL, Boeing,

BF Goodrich, Hexcel, House of Fraser, Microsoft, Seattle

City Light, Tacoma City Light, Thompson F inancial

Services, and Wizards of the Coast.

Steven L. McShane

Steven L. McShane is Pro￾fessor of Management in

the Graduate School of

Management at the Univer￾sity of Western Australia,

where he recei ves high

teaching ratings from stu￾dents in P erth, Singapore,

and other cities in Asia where

UWA offers its pro grams. He is

also an Honorar y Professor at Uni￾versiti Tunku Abdul Rahman (UTAR) in Malaysia and pre￾viously taught in the business f aculties at Simon F raser

University and Queen’s University in Canada. Ste ve has

conducted e xecutive seminars with Nokia, Wesfarmers

Group, ALCOA World Alumia Australia, and many other

organizations. He is also a popular visiting speaker, having

given four dozen talks to f aculty and students in almost a

dozen countries over the past three years.

Steve earned his PhD from Michigan State University in

organizational beha vior, human resource management,

and labor relations. He also holds a Master of Industrial

Relations from the Uni versity of Toronto, and an under -

graduate degree from Queen’s University in Canada. Steve

has served as President of the Administrative Sciences As￾sociation of Canada (the Canadian equivalent of the Acad￾emy of Management) and Director of Graduate Pro grams

in the business faculty at Simon Fraser University.

Along with co-authoring Organizational Behavior, 4e,

Steve is the author of Canadian Organizational Behaviour,

6th ed. (2006), co-author (with Tony Travaglione) of

Organisational Behaviour on the P acific Rim, 2e (2007),

and co-author (with Mar y Ann von Glinow) of Organiza￾tional Behaviour: Essentials (2007). He has also published

several dozen ar ticles, book chapters, and conference

papers on di verse topics, including managerial decision

making, or ganizational lear ning, socialization of ne w

employees, gender bias in job e valuation, wrongful dis￾missal, media bias in business magazines, and labor union

participation.

Steve enjoys spending his leisure time swimming, body

board surfing, canoeing, skiing, and traveling with his wife

and two daughters.

hiL30123_fm_i-xvii.indd iv 11/10/06 9:52:23 PM 11/10/06 9:52:23 PM

/// BRIEF CONTENTS

PART 1 Managers and the Environment

Chapter 1 Management2

Chapter 2 The External and Internal Environments26

Chapter 3 Globalization and the Manager54

Chapter 4 Stakeholders, Ethics, and Corporate Social Responsibility80

PART 2 Strategizing

Chapter 5 Planning and Decision Making104

Chapter 6 Strategy132

Chapter 7 Managing Operations156

PART 3 Organization Architecture

Chapter 8 Organizing180

Chapter 9 Control Systems206

Chapter 10 Organizational Culture230

Chapter 11 Developing High-Performance Teams254

PART 4 Leading

Chapter 12 Staffing and Developing a Diverse Workforce284

Chapter 13 Motivating and Rewarding Employee Performance314

Chapter 14 Managing Employee Attitudes and Well-Being346

Chapter 15 Managing through Power, Influence, and Negotiation376

Chapter 16 Effective Leadership402

Chapter 17 Communication426

PART 5 Change

Chapter 18 Managing Innovation and Change452

Glossary478

Index487

hiL30123_fm_i-xvii.indd v 11/10/06 9:52:24 PM 11/10/06 9:52:24 PM

PART 1

Managers and the Environment

Chapter 1

Management 2

The Functions of Management 4

Planning and Strategizing 4

Organizing 5

Controlling 6

Leading and Developing Employees 6

Types of Managers 7

Corporate-Level General Managers 8

Business-Level General Managers 9

Functional Managers 9

Frontline Managers 10

Becoming a Manager10

From Specialist to Manager 10

Mastering the Job 11

Managerial Roles 12

Interpersonal Roles 13

Informational Roles 14

Decisional Roles 15

Some Qualifications 15

Management Competencies:

Do You Have What It Takes? 16

Managerial Skills 16

Managerial Values 19

Managerial Motivation 20

In Conclusion: Why Does It Matter? 21

Management Challenges 21

Management Portfolio 22

CLOSING CASE

George David 22

Chapter 2

The External and Internal

Environments 26

The Task Environment29

The Threat of Entry 30

Bargaining Power of Buyers 31

Bargaining Power of Suppliers 32

The Threat of Substitutes 32

The Intensity of Rivalry 33

A Sixth Force: Complementors 37

Synthesis 37

The General Environment38

Political and Legal Forces 39

Macroeconomic Forces 39

Demographic Forces 40

Sociocultural Forces 41

Technological Forces 41

International Forces 41

Dynamic Changes in the External Environment42

Incremental versus Discontinuous Change 42

Environmental Uncertainty 43

The Internal Environment44

Internal Organization 44

Employees (Human Capital) 45

Resources 46

In Conclusion: Why Does It Matter?48

Management Challenges49

Management Portfolio50

CLOSING CASE

The Pharmaceutical Industry50

Chapter 3

Globalization and the Manager 54

The Process of Globalization56

The Spread of Market-Based Systems 56

Falling Barriers to Trade and Investment 58

Tumbling Communication and Transportation Costs 58

Implications of Globalization59

The Globalization of Production 60

The Globalization of Markets 61

Technology: The Great Facilitator 61

Constraints on Globalization62

Protectionist Countertrends 63

National Differences in Consumer Behavior 64

National Differences in Business Systems 64

Differences in Social Culture 65

The Benefits of Going Global66

Expanding the Market 67

Realizing Scale Economies 67

Realizing Location Economies 67

Global Learning 68

Management Challenges in the Global

Enterprise69

Global Standardization or Local Customization 69

Entry Mode 70

Locating Activities 71

Managing People in the Multinational Firm 72

// TABLE OF CONTENTS

hiL30123_fm_i-xvii.indd vi 11/10/06 9:52:24 PM 11/10/06 9:52:24 PM

Contents vii

In Conclusion: Why Does It Matter?74

Management Challenges75

Management Portfolio75

CLOSING CASE

Planet Starbucks75

Chapter 4

Stakeholders, Ethics, and Corporate

Social Responsibility 80

Stakeholders and Stakeholder Management82

Stakeholders and the Organization 83

Taking Stakeholders into Account 83

Business Ethics86

Ethical Issues in Management 86

The Roots of Unethical Behavior 90

Philosophical Approaches to Ethics 92

Behaving Ethically 94

Social Responsibility97

Arguments for Social Responsibility 98

The Friedman Doctrine 99

In Conclusion: Why Does It Matter?100

Management Challenges100

Management Portfolio101

CLOSING CASE

Working Conditions at Wal-Mart101

PART 2

Strategizing

Chapter 5

Planning and Decision Making104

Planning within Organizations106

Levels of Planning 107

Planning Horizons 108

Single-Use Plans and Standing Plans 109

Contingency Planning 110

Strategic Planning: A Closer Look112

Setting the Context: Mission, Vision,

Values, and Goals 113

External and Internal Analysis 116

SWOT Analysis: Formulating Strategies 116

Action Plans 117

Implementation 117

Review and Adjustments 117

The Benefits and Pitfalls of Planning118

The Pitfalls of Planning 119

Improving Planning 120

Decision Making121

The Rational Decision-Making Model 122

Bounded Rationality and Satisficing 122

Decision-Making Heuristics and Cognitive Biases 123

Prospect Theory 125

Groupthink 126

Improving Decision Making 127

In Conclusion: Why Does It Matter?127

Management Challenges128

Management Portfolio128

CLOSING CASE

Boom and Bust in Telecommunications129

Chapter 6

Strategy132

Superior Performance and Competitive

Advantage134

Business-Level Strategy137

Competitive Theme: Differentiation or Low Cost? 137

Segmenting the Market 139

Choosing Segments to Serve 140

Segmentation and Strategy 140

The Low Cost–Differentiation Frontier 141

Implementing Business-Level Strategy143

Configuring the Value Chain 144

Competitive Advantage and Strategic Fit 146

Competitive Tactics147

Tactical Pricing Decisions 147

Tactical Product Decisions 148

Corporate-Level Strategy148

Focus on a Single Business 149

Vertical Integration 149

Diversification 150

International Expansion 151

In Conclusion: Why Does It Matter?152

Management Challenges152

Management Portfolio153

CLOSING CASE

Google’s Quest for Competitive Advantage153

Chapter 7

Managing Operations156

Productivity and Efficiency158

hiL30123_fm_i-xvii.indd vii 11/10/06 9:52:24 PM 11/10/06 9:52:24 PM

viii Contents

Configuring the Production System159

Traditional Production Systems 159

Production Systems, Flexibility, and Costs 160

New Production Technologies: Mass

Customization 162

Optimizing Work Flow: Process Reengineering and

Process Innovation 164

Asset Utilization165

Quality Management167

Managing Inventory169

Economic Order Quantity and Setup Time 170

Just-in-Time Inventory Systems 171

Build to Order and Inventory 172

Supply Chain Management and

Information Systems174

Product Development and Productivity175

In Conclusion: Why Does It Matter?176

Management Challenges176

Management Portfolio177

CLOSING CASE

Improving Productivity in the Auto Industry177

PART 3

Organization Architecture

Chapter 8

Organizing 180

Organization Architecture182

Designing Structure: Vertical Differentiation184

Centralization and Decentralization 184

Tall versus Flat Hierarchies 188

Designing Structure: Horizontal

Differentiation191

Functional Structure 192

Multidivisional Structure 193

Geographic Structure 194

Matrix Structure 196

Designing Structure: Integrating Mechanisms198

Formal Integrating Mechanisms 198

Informal Integrating Mechanisms: Knowledge

Networks 199

Strategy, Coordination, and Integrating

Mechanisms 201

In Conclusion: Why Does It Matter?202

Management Challenges203

Management Portfolio203

CLOSING CASE

Dow Chemical203

Chapter 9

Control Systems 206

Control Systems208

Establishing Goals and Standards 208

Measuring Performance 210

Comparing Performance against

Goals and Standards 210

Taking Corrective Action 211

Providing Reinforcement 211

Methods of Control212

Personal Controls 212

Bureaucratic Controls 213

Output Controls 214

Cultural Control 216

Control through Incentives 217

Market Controls 218

Summary 219

Matching Controls to Strategy

and Structure220

Controls in the Single Business 220

Controls in Diversified Firms 221

Choosing Control Metrics:

The Balanced Scorecard223

Backchannel Control Methods225

In Conclusion: Why Does It Matter?226

Management Challenges226

Management Portfolio226

CLOSING CASE

Lincoln Electric227

Chapter 10

Organizational Culture 230

What Is Organizational Culture?232

Shared Values 233

Shared Assumptions 234

Content of Organizational Culture 234

Organizational Subcultures 235

Deciphering an Organization’s Culture236

Organizational Stories and Legends 237

Rituals and Ceremonies 237

Organizational Language 238

Physical Structures and Décor 238

hiL30123_fm_i-xvii.indd viii 11/16/06 3:47:50 PM 11/16/06 3:47:50 PM

Contents ix

Is Organizational Culture Important?239

Organizational Culture Strength and Fit 239

Corporate Cults and Suppressing Dissent 240

Adaptive Cultures 241

Organizational Culture and Business Ethics 241

How to Change and Strengthen

Organizational Culture242

Actions of Founders and Leaders 243

Aligning Artifacts 245

Introducing Culturally Consistent Rewards 245

Selecting and Socializing Employees 246

Managing Organizational Culture

during Mergers246

Strategies to Merge Different

Organizational Cultures 247

In Conclusion: Why Does It Matter?249

Management Challenges250

Management Portfolio250

CLOSING CASE

Schwab Acquires U.S. Trust250

Chapter 11

Developing High-Performance

Teams 254

Why Rely on Teams?256

Why People Belong to Informal Groups 257

The Trouble with Teams258

Social Loafing 258

Types of Teams258

Self-Directed Teams 260

Virtual Teams 261

A Model of Team Effectiveness262

Team Design Features264

Task Characteristics 264

Team Size 264

Team Composition 265

Team Roles 265

Team Processes266

Team Development 267

Team Norms 269

Team Cohesiveness 271

Team Trust 272

Managing Team Conflict274

Task versus Relationship Conflict 274

Interpersonal Conflict Management Styles 275

Structural Solutions to Team Conflict 277

In Conclusion: Why Does It Matter?277

Management Challenges278

Management Portfolio278

CLOSING CASE

The Shipping Industry Accounting Team279

PART 4

Leading

Chapter 12

Staffing and Developing a Diverse

Workforce 284

Human Resource Planning: Translating Strategy

into Staffing Requirements286

Step 1: Conduct Job Analysis 287

Step 2: Estimate Human Resource Demand 287

Step 3: Document Current Human Resource Supply 288

Step 4: Estimate Future Internal Human Resource

Supply 288

Step 5: Estimate Future External Human Resource

Supply 289

Relying on the Contingent Workforce 289

Staffing a Diverse Workforce290

Surface-Level and Deep-Level Diversity 290

Is Diversity Important? 291

Recruiting Job Applicants294

Nurturing the Employer Brand 295

Internal versus External Recruitment 296

Choosing Recruiting Channels 297

Recruitment and Diversity 299

Selecting Job Applicants299

Reliability and Validity of Selection Methods 299

Application Forms, Résumés, and Reference Checks 301

Work Sample Tests 301

Employment Interviews 302

Ability and Personality Tests 303

Selection and Diversity 303

Orienting and Developing Employees304

Employee Orientation 304

Training Needs Analysis 305

Training Methods 305

Supporting the Training Process 307

In Conclusion: Why Does It Matter?308

Management Challenges308

Management Portfolio309

CLOSING CASE

Rebranding McJobs309

hiL30123_fm_i-xvii.indd ix 11/10/06 9:52:24 PM 11/10/06 9:52:24 PM

x Contents

Chapter 13

Motivating and Rewarding Employee

Performance 314

MARS Model of Individual Behavior and Results316

Motivation 316

Ability 317

Role Perceptions 317

Situational Factors 318

Using MARS to Diagnose Employee Disengagement 318

Motivating Employees: A Three-Part Process318

Part 1: Managing Motivation through

Drives and Needs319

Maslow’s Needs Hierarchy Theory 319

Learned Needs Theory 322

Four-Drive Theory 322

Part 2: Managing Motivation through Goals,

Expectations, and Feedback325

Goal Setting and Feedback 325

Expectancy Theory of Motivation 327

Part 3: Managing Motivation through Extrinsic and

Intrinsic Rewards329

Motivating Employees through Extrinsic

Rewards329

Membership- and Seniority-Based Rewards 329

Job Status–Based Rewards 330

Competency-Based Rewards 330

Performance-Based Rewards 330

Nonfinancial Rewards 332

Improving Performance Appraisals 332

Rewarding Employees Equitably 333

Motivating Employees through Intrinsic

Rewards335

Job Characteristics Model 336

Motivating Employees through Job Enrichment 337

Motivating Employees through Empowerment 337

In Conclusion: Why Does It Matter?338

Management Challenges339

Management Portfolio340

CLOSING CASE

Buddy’s Snack Company340

Chapter 14

Managing Employee Attitudes and

Well-Being 346

Emotions in the Workplace348

Emotions, Attitudes, and Behavior 349

Cognitive Dissonance 351

Job Satisfaction351

Job Satisfaction and Work Behavior 352

Job Satisfaction and Performance 354

Job Satisfaction and Customer Satisfaction 354

Organizational Commitment355

Watch Out for Continuance Commitment! 356

Building Organizational Commitment 356

Work-Related Stress and Its Management357

General Adaptation Syndrome 358

Consequences of Distress 358

Stressors: The Sources of Stress 359

Managing Work-Related Stress 361

Work–Life Balance 364

Personality Effects on Attitudes and Well-Being365

The Big Five Personality Dimensions 365

Effects of Personality on Emotions and Attitudes 366

Effects of Personality on Stress and Well-Being 366

Effects of Personality on Performance 367

Effects of Personality on Career Satisfaction 367

In Conclusion: Why Does It Matter?369

Management Challenges369

Management Portfolio370

CLOSING CASE

Rough Seas on the LINK650370

Chapter 15

Managing through Power, Influence,

and Negotiation 376

Power in Organizations378

Sources of Power379

Formal Hierarchical Position 379

Expertise 381

Control over Information 381

Networks of Allies 383

Individual Attributes 383

Contingencies of Power385

Influence386

Influence Tactics 386

Consequences and Contingencies 391

Negotiation: The Art of Conflict Resolution392

Bargaining Zone Model of Negotiations 393

Negotiating Effectively 394

In Conclusion: Why Does It Matter?396

Management Challenges396

Management Portfolio396

CLOSING CASE

The Rise and Fall of Mike Sears397

hiL30123_fm_i-xvii.indd x 11/10/06 9:52:25 PM 11/10/06 9:52:25 PM

Contents xi

Chapter 16

Effective Leadership 402

Managing and Leading404

What Makes an Effective Leader?405

The Power–Influence Perspective406

The Competency (Trait) Perspective407

Strategic Thinking 407

Achievement Motivation 408

Power Motivation 408

Charisma 409

Emotional Intelligence 409

Limitations and Implications 410

The Behavior Perspective410

The Contingency Perspective411

Fiedler’s Contingency Theory 411

Path–Goal Theory 413

Leadership Substitutes 416

Transformational Leadership416

Elements of Transformational Leadership 417

Evaluating Transformational Leadership 419

Gender Differences in Leadership419

In Conclusion: Why Does It Matter?420

Management Challenges421

Management Portfolio421

CLOSING CASE

A.G. Lafley421

Chapter 17

Communication 426

The Communication Process428

Communication Channels429

Verbal Communication 430

Nonverbal Communication 431

Selecting the Best Communication Channel 432

Organizational Communication434

Formal Communication Channels 434

Informal Communication Channels 435

Communication Barriers and

Breakdowns (Noise)436

Perceptions 436

Filtering 438

Language Barriers 438

Information Overload 439

Cultural Differences 440

Gender Differences 441

Improving Communication442

Match Media to Messages 442

Reduce Information Overload 442

Get Your Message Across 443

Engage in Active Listening 443

Proactively Use the Grapevine 444

Communicate Directly with Employees 445

Facilitate Communication through Workspace Design 445

In Conclusion: Why Does It Matter?446

Management Challenges447

Management Portfolio447

CLOSING CASE

The Challenger Disaster447

PART 5

Change

Chapter 18

Managing Innovation and Change 452

Paradigm Shifts454

Natural Limits to Technology 455

Disruptive Technology 456

New Business Model 458

Punctuated Equilibrium 459

Organizational Inertia460

Cognitive Schemata 460

Internal Political Constraints 461

Organizational Culture 461

Commitments and Capabilities 462

External Institutional Constraints 463

Organizational Change463

Leadership Committed to Change 463

Unfreezing the Organization 464

Moving the Organization 465

Refreezing the Organization 466

Failed Change Efforts and the Secret of Success466

Driving Innovation468

New Product Failures 468

Generating Successful Innovations 469

In Conclusion: Why Does It Matter?473

Management Challenges473

Management Portfolio473

CLOSING CASE

Transforming Reuters473

Glossary478

Index487

hiL30123_fm_i-xvii.indd xi 11/10/06 9:52:25 PM 11/10/06 9:52:25 PM

The management textbook market is crowded, so why did

we write another one? The answer, quite frankly, is that a

huge gap exists between what managers actually do or think

about and what the existing gaggle of management books

say are contemporary practices. Some topics that managers

say are important (such as strategizing and shaping cor po￾rate culture) need much more attention in management

courses; other concepts and practices long for gotten b y

most managers shouldn’t be required reading in a colle ge

management course. Management theor y has also mo ved

forward, and in some cases has become w ell-established

practice in the cor porate world. Again, we were surprised

by the gap in what students have been reading. So, this book

was crafted to close that g ap, to help students have a more

realistic understanding about w hat managers actuall y do

and what management theory actually recommends. We of￾fer this rele vant view of management in a w ay that has a

logical flow of content, is succinct and clear in its writing

style, rich in real-world examples, and remains focused on

the role of managers.

// RELEVANCE: A BOOK FOR THE

TWENTY-FIRST CENTURY

Almost 100 years ago, French industrialist Henri Fayol pro￾posed five functions of management, four of w hich (plan￾ning, organizing, leading, and controlling) have become the

foundation of management books o ver the past 40 y ears.

While some management functions are timeless, we firmly

believe that the late-1800s managers who inspired Fayol to

describe these functions are markedly different from effec￾tive managers today. In other w ords, it is time for a 21st￾century management book written for 21st-centur y

managers. At the same time, w e reco gnize that F ayol’s

management functions have become deeply entrenched in

management courses, so this book proposes an evolutionary

rather than re volutionary approach to change. We retain

four management functions, and with similar names to the

past, but these subtle dif ferences are more pronounced in

the chapters and emphasis throughout this book. Let’s look

at a few of these emerging perspectives.

Planning and Strategizing

Most management books focus on planning, w hereas we

write about planning and strategizing. A trivial difference?

Hardly! While planning is a formal process for periodically

(e.g., once a y ear) generating or ganizational strate gies,

strategizing is a continual process for thinking through what

a firm should pursue to attain its goals. In other words, suc￾cessful managers are continually strategizing, sometimes in

the absence of planning. Thus, we repeatedly emphasize

how managers strate gize. And to a void per petuating the

error that planning and strate gizing are interchangeab le

terms, this book has the distinction of presenting separate

chapters for both practices.

Organizing and Controlling—Organization

Architecture

Most management textbooks treat organizing and control￾ling as completely separate functions. Yet managers will tell

you that organizing people into departments and teams is an

important form of control. They also point out that various

control systems—such as incentive systems and budgets—

are closely connected to the or ganization’s structure. Fur￾thermore, managers emphasize that or ganizational culture

is an important control system, no matter how difficult it is

to shape; it should never be viewed as an untouchable fix￾ture of the inter nal environment (as other books assume).

Thus, we apply the contemporar y management vie w that

organizing and controlling belong to gether as two parts of

the underlying management process, called organizational

architecture .

Leading and Developing Employees

Leadership is impor tant; in f act, it is vital for guiding the

organization toward its objectives and for applying the other

management functions. But managers toda y do more than

motivate, influence, and direct others. Although missing

from Fayol’s original functions, this book highlights the fact

that managers also devote much of their time to developing

staff. In f act, General Electric and other top-perfor ming

companies insist that managers give the highest priority to

hiring, training, mentoring, and re warding employees. In

contemporary management parlance, these companies con￾sider human capital as their competiti ve advantage, and

managers play a vital role in enhancing the v alue of that

resource.

// ORGANIZATION: A LOGICAL

INTEGRATED FLOW OF TOPICS

We held se veral meetings, transmitted numerous e-mail

messages, and consulted with dozens of instr uctors to

hammer out the right or ganization of chapters and topics

for this book. The fact is, by finding the right sequence of

chapters and topics, w e can more successfull y help stu￾dents to understand management roles and their intercon￾nections. The chapter sequence also reflects how managers

actually think and act, w hich explains why this book is

organized somewhat differently from management te xt￾books that rely on past models. For example, the chapters

on organizational structure and controls are side-b y-side

for the reasons noted earlier . We also or ganize staffing,

\\ PREFACE \\\

xii

hiL30123_fm_i-xvii.indd xii 11/10/06 9:52:25 PM 11/10/06 9:52:25 PM

motivating, and maintaining the well-being of employees

in a sequence, because this is how managers actually view

the process of building human capital. More generall y,

this book moves from macro, through midle vel issues, to

micro issues, and closes by switching back to a macro per￾spective (managing innovation and change).

This book also takes an integrated rather than piecemeal

approach to management topics. This means that later

chapters build upon concepts introduced in earlier chapters.

Students can’t make sense of planning and strate gizing, for

example, unless they have learned about the e xternal envi￾ronment. The goal is to get students to see the big picture,

and to understand the impor tant linkages between different

aspects of management. To drive this home, w e frequently

refer to concepts introduced in prior chapters, and show how

they related to the material being discussed in the cur rent

chapter. At the same time, w e are sensitive to the desire of

some instructors to skip certain chapters. We have not pushed

the level of integration so far that this cannot be done.

// SUCCINCT: FOCUSING ON

WHAT IS IMPORTANT

The f ield of management co vers a lar ge territory, but w e

were amazed at how many pages the leading management

textbooks required to cover this territory. Most management

courses are one semester, which makes it very difficult for

students to read through their te xtbook. Even in a tw o￾semester course, the reading requirements could potentially

undermine rather than impro ve the lear ning process.

Although deciding what to include and exclude from a text￾book is never easy, we were determined to keep this book to

a more reasonable length. This book has no chapter on man￾agement history, choosing instead to discuss historical de￾velopments where appropriate throughout the book. We also

avoided special chapters found in other books (entrepre￾neurship, information systems, and so on). These topics are

peripheral to the management discipline and , indeed, are

usually the focus of other courses. Through these and other

adjustments, we have crafted a management book with a

manageable 18 chapters and a more reasonab le number of

pages of reading.

// CONTENT: UP-TO-DATE

Along with its contemporar y management str ucture, this

book offers students up-to-date management concepts and

examples. Cur rent management thinking is apparent

throughout, such as reco gnizing social concerns with glo￾balization (Chapter 3), practicing backchannel control

methods (Chapter 9), building an emplo yer brand (Chap￾ter 12), impro ving customer satisf action through better

job satisfaction (Chapter 14), and recognizing the effects of

disruptive technologies (Chapter 18).

Students want real-world examples that are fresh, not an￾cient histor y (lik e the 1980s or e ven the 1990s), so w e

scanned the latest sources to link management concepts to

recent events. For instance, we describe how Chick-Fil-A

CEO Dan Cathy serves as a figurehead by camping out with

customers (Chapter 1), how Intel CEO Paul Otellini is steer￾ing the microchip mak ers to ward a ne w strate gic plan

(Chapter 5), ho w Unilever has reconf igured its or ganiza￾tional str ucture in recent y ears to f ind the right balance

among competing demands in the marketplace (Chapter 8),

how Dell executives have attempted to shift the computer -

maker’s corporate culture (Chapter 10), how Google attracts

top talent b y engaging in guer rilla recr uitment practices

(Chapter 12), and how Xerox CEO Anne Mulcahy led the

company’s dramatic tur naround despite her status as an

“outside-insider.”

// READABILITY: INTERESTING

AND ACCESSIBLE

Management textbooks don’t have to be dense, boring, and

dull. Our tactic for engaging students has been to illustrate

concepts through stories, using examples that are current,

interesting, and, when appropriate, pro vocative. We are

story tellers, and w e belie ve that the e vocative stories

throughout this book will help students to understand the

content and moti vate them to read through the assigned

pages. At the end of the day, we have written this book for

students; we want to reach them through lively and acces￾sible communication.

To improve readability, we have also cleared out the clut￾ter found in most management books. Gone is the w eighty

boxed material because instr uctors and students alik e told

us that content or anecdotes placed in bo xes are not read.

Instead, these examples are embedded in the text so they are

more clearly interwoven with the discussion of k ey con￾cepts. Each chapter also opens not with the traditional boxed

case, but with a brief story that is used to illustrate the con￾cepts covered in the chapter. The goal, again, is to capture

the attention of students and draw them in.

// MANAGEMENT CENTRIC

A management textbook should write about what manag￾ers do and ho w they can perfor m their jobs more ef fec￾tively. This principle seems obvious, but it is often lost in

practice as management textbooks become steeped in the￾ory without connecting back to management practice.

Aware of this tendenc y, we have tried to mak e managers

the center piece of this book. Essentiall y, w e adopt an

action-oriented approach by focusing on what successful

managers do and why those actions work well (and under

what conditions they work well). We repeatedly emphasize

xiii

hiL30123_fm_i-xvii.indd xiii 11/10/06 9:52:25 PM 11/10/06 9:52:25 PM

why the concepts discussed in a chapter matter for manag￾ers. We also drive these points home at the end of e very

chapter with a closing section appropriately entitled “Why

does it matter?”

// HIGH-QUALITY SUPPORT

MATERIALS

Unlike revised texts/resource packages, where materials are

refitted, resized, and repur posed, the resources suppor ting

this text have been freshly created in close conjunction with

the text and each other to provide you with a truly integrated

support package organized by chapter learning objectives,

measures lear ning outcomes, and incor porating AACSB

standards.

The Instructor’s Manual (authored by Barbara Carlin,

University of Houston, and Chris Quinn-Trank, Texas Tech

University) closely follows the te xtbook’s learning objec￾tives and includes e xtra war stories and teaching tips. The

Instructor’s Manual also incor porates ideas and guidelines

for implementing the Management P ortfolio Project into

your management course.

The Test Bank (authored by Carol Johnson, University

of Denver) includes over 150 questions per chapter, includ￾ing multiple-choice, true/false, and short answer questions

at various levels of Bloom’s Taxonomy. Every test bank

question is tagged to the cor responding te xtbook page,

learning objective, Bloom’s Taxonomy, and the AACSB

requirement it assesses. A test table is also provided to help

you easily choose questions to fit your needs. An additional

set of practice quizzes, also written by the test bank author,

is available on the text’s Online Learning Center.

PowerPoint Package (authored by Amit Shah, Frostburg

State University) includes over 350 slides, each tied to the

textbook page and learning objective. Slides include teach￾ing notes to help reduce y our prep time. A set of student

slides is available on the text’s Online Learning Center.

Instructor’s Resource CD. All of our instructor supple￾ments are available in this one-stop, multimedia resource,

which includes the PowerPoint Package, Test Bank, and In￾structor’s Manual.

Videos. Aset of ne w videos on management issues

accompanying this text is suitable to support your class￾room or student lab, or for home viewing. These thought￾provoking video clips are available upon adoption of this

text.

Online Learning Center (OLC). Our Web site mirrors the

text chapter-by-chapter. OLCs can be delivered in multiple

ways—professors and students can access them directl y

through the textbook Web site, through PageOut, or within

a course management system such as WebCT, Blackboard,

TopClass, or eCollege.

Enhanced Cartridge. McGraw-Hill/Irwin is pleased to

offer an enhanced car tridge to help y ou or ganize y our

course. Not onl y do y ou receive the instr uctor’s material,

but we also provide you with additional student e xercises

such as threaded discussion questions, quizzes, and more!

// ADDITIONAL RESOURCES FOR

YOUR PRINCIPLES OF

MANAGEMENT COURSE

Group and Video Resour ce Man ual: An Instructor’s

Guide to an Active Classroom. This electronic manual for

instructors includes a menu of items the y can use as teach￾ing tools in class. Included are detailed teaching notes and

PowerPoints for self-assessments, test your knowledge exer￾cises, the Manager’s Hot Seat DVD, as well as new group

exercises, complete with any handouts or worksheets you’ll

need to accompany them.

Manager’s Hot Seat. This interactive, video-based soft￾ware puts students in the manager’ s hot seat w here they

have to apply their knowledge to make decisions on the spot

on hot issues such as ethics, di versity, working in teams,

and the virtual workplace. This resource is available for stu￾dent purchase with the Hill/McShane te xt. Resources to

support these videos are located in the Group and Video

Resource Manual.

Team Lear ning Assistant (TLA). This online tool

makes it easy for y ou to implement team lear ning in your

class. Monitor the team process, f acilitate peer feedback

and evaluation, teach the value of team contracts and con￾flict resolution, and g rade individual performance quickly

and easily by using TLA.

Hill/McShane in eBook format. Real Texts—Real Sav￾ings! Are you interested in giving your students the option

to access the te xtbook contents digitally, with interactive,

dynamic features and save your students some mone y? If

so, our eBooks are for you. They are identical to our printed

textbooks but cost about half as much. Your students will

be able to search, highlight, bookmark, annotate, and print

the eBook! McGra w-Hill Higher Education’ s eBooks

can be viewed online on an y computer with an Inter net

connection or downloaded to an individual’s computer. For

more information, please visit http://ebooks.primisonline.

com/or contact your McGraw-Hill rep.

You can customize this te xt. McGraw-Hill/Primis

Online’s digital database of fers you the fle xibility to

customize your course including material from the lar g￾est online collection of te xtbooks, readings, and cases.

Primis leads the w ay in customized eBooks with hun￾dreds of titles available at prices that save your students

over 20 percent off bookstore prices. Additional informa￾tion is available at 800-228-0634.

BusinessWeek Edition. Your students can subscribe to

BusinessWeek for a speciall y priced rate of $8.25 in addi￾tion to the price of the te xt. Students will recei ve a pass

code card shrink-wrapped with their ne w text. The card

xiv Preface

hiL30123_fm.indd Page xiv 5/19/07 12:22:13 AM epg /Volumes/108/MHIA051/hiLfm